Goldman Sachs' New 12-Month Gold Forecast: $1,650 an Ounce
Bank Cites Further Quantitative Easing and Rising Interest Rates
Investment powerhouse Goldman Sachs now believes gold may rally more that 20 percent from this month's record to $1,650 an ounce in 12 months citing further quantitative easing in the United States and the prospect for falling long-term interest rates.
Goldman also raised its three- and six-month gold price forecasts to $1,400 and $1,525 an ounce, respectively.
Analysts from Goldman Sachs wrote in a report this week:
With U.S. real interest rates pushing lower off the slowdown in the pace of the U.S. economic recovery and the growing prospect of another round of quantitative easing, we expect gold prices to continue to climb.... Despite the rebound in net speculative length, it remains well below levels consistent with the current low U.S. real interest rate environment... The return to quantitative easing will likely be a strong catalyst to drive gold prices higher, and we expect the gold price rally to continue until U.S. monetary policy begins to tighten.
The investment bank expects the Federal Reserve to return to quantitative easing with purchases of U.S. Treasury securities of $1 trillion, which should depress U.S. bond yields.
The analysts recommended buying Comex December 2011 gold futures. They also recommended investors buy Nymex January 2011 platinum, saying that “recovering global automobile demand will likely continue to put upward pressure on auto-catalyst demand and therefore on platinum and palladium prices.”
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